Created on 29th July 2025
Grade level: Grade 12th grade
1 plays
46 Questions
Accountancy
Questions (46)
1. What is the primary objective of a partnership firm?
To share profits and losses among partners
4 choice options
2. In a partnership firm, when a partner's profit-sharing ratio changes, what is this known as?
Change in profit-sharing ratio
4 choice options
3. Which of the following is NOT a reason for the admission of a new partner?
To dissolve the partnership firm
4 choice options
4. What occurs when a partner retires from a partnership?
The remaining partners must pay off the retiring partner's share
4 choice options
5. If a partner dies, what happens to their share in the partnership?
It goes to the deceased partner's heirs
4 choice options
6. What is the first step in the dissolution of a partnership firm?
Notifying creditors
4 choice options
7. When a new partner is admitted, how is the goodwill calculated?
Based on the average profit of previous years
4 choice options
8. In a change of profit-sharing ratio, how is the sacrifice made by existing partners calculated?
By subtracting the new ratio from the old ratio
4 choice options
9. What document is essential for the dissolution of a partnership?
Partnership deed
4 choice options
10. What happens to the assets of a partnership firm upon dissolution?
They are sold, and the proceeds are used to pay off debts
4 choice options
11. When a partner retires, how is their capital account settled?
It may be settled based on the partnership agreement
4 choice options
12. What is the consequence of not having a partnership deed?
The partnership will be governed by default laws
4 choice options
13. Which of the following is a method of valuing goodwill during the admission of a partner?
Average profit method
4 choice options
14. In the case of a change in profit-sharing ratio, how are the profits adjusted?
Using a combination of old and new ratios
4 choice options
15. What must partners do if a partner wishes to retire?
Hold a meeting with all partners
4 choice options
16. Which of the following is true about the retirement of a partner?
It requires the consent of all partners
4 choice options
17. Which term describes the distribution of assets upon the dissolution of a partnership?
Liquidation
4 choice options
18. In what scenario would a partnership firm be dissolved involuntarily?
If a partner is declared insane
4 choice options
19. What is a key factor in determining the new profit-sharing ratio when a partner is admitted?
The goodwill of the firm
4 choice options
20. What document outlines the rules for changing the profit-sharing ratio?
Partnership deed
4 choice options
21. What procedure must be followed when a partner passes away?
Adjustment of the deceased partner's share
4 choice options
22. What is the effect of a change in the profit-sharing ratio on the capital accounts of existing partners?
It requires revaluation of assets and liabilities.
4 choice options
23. In the admission of a new partner, how is goodwill typically calculated?
Based on the past and future earning capacity.
4 choice options
24. What happens to a partner's share of profits upon retirement?
It is distributed among the remaining partners.
4 choice options
25. Which of the following is a common cause for the dissolution of a partnership?
Death of a partner.
4 choice options
26. When a new partner is admitted, what must be adjusted in the partnership accounts?
Goodwill and profit-sharing ratio.
4 choice options
27. What method is commonly used to calculate goodwill upon admission of a new partner?
Capitalization method.
4 choice options
28. In the retirement of a partner, what is done with their share of goodwill?
It is distributed among remaining partners.
4 choice options
29. What is the primary reason for revaluation of assets and liabilities during a change in profit-sharing ratio?
To reflect their fair value in the new ratio.
4 choice options
30. What is a common accounting treatment when a partner dies?
The deceased partner's estate is paid out.
4 choice options
31. How is the profit-sharing ratio decided upon the admission of a new partner?
It is based on negotiations and agreement.
4 choice options
32. What document outlines the terms of a partnership including profit-sharing ratios?
Partnership deed.
4 choice options
33. Which of the following is true about the admission of a partner?
It requires unanimous consent of all existing partners.
4 choice options
34. What happens to the capital accounts of existing partners when a new partner is admitted?
They need to be adjusted for goodwill.
4 choice options
35. In the event of a partner's retirement, what is a key consideration for the remaining partners?
All of the above.
4 choice options
36. What is the first step in the dissolution of a partnership?
Agreement among partners.
4 choice options
37. Which item is NOT typically included in the revaluation of assets when a partner retires?
Current liabilities.
4 choice options
38. Upon dissolution, how should the losses be distributed among partners?
In the profit-sharing ratio.
4 choice options
39. What is the treatment of accumulated profits when a partner retires?
They are distributed among remaining partners.
4 choice options
40. What is the main purpose of preparing a partnership deed?
All of the above.
4 choice options
41. How is a new partner's initial capital contribution typically determined?
It is based on negotiations.
4 choice options
42. During the admission of a new partner, how is the existing goodwill typically treated?
Adjusted and valued.
4 choice options
43. What is a possible outcome when a partner is admitted into a firm?
Increased capital base.
4 choice options
44. What is typically required for a partnership to continue after the death of a partner?
A new partnership deed.
4 choice options
45. What is the primary reason for valuing goodwill before admitting a new partner?
To ensure fair compensation for the new partner.
4 choice options
46. In the context of partnership firms, what does 'dissolution' mean?
The end of the partnership.
4 choice options
